Rule of thumb is inaccurate method to design reserves policy: IMF paper


The use of rules of thumb to measure the optimal level of international reserves can give imprecise benchmarks in low-income countries, according to an International Monetary Fund paper published on Thursday.

Era Dabla-Norris, Jun Il Kim and Kazuko Shirono, the paper's authors, develop a cost-benefit approach to quantify the optimal level of international reserves in low-income countries, focusing on the role of reserves in preventing and mitigating absorption drops triggered by large external

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